eBay boosts mobile payments with Zong acquisition

PayPal in your pocket for US$240 million

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Mobile payments outfit Zong is to be assimilated into the PayPal world, following the announcement that eBay is handing over US$240 million in cash to acquire the company.

Zong runs the kind of operation that looks like someone anybody could manage: buyers enter their mobile phone numbers when they want to buy something from a site, receive a transaction code, complete the purchase, and pay for the purchase on their phone bill. Proving that it’s not such a tough nut to crack, Zong claims 250 carriers worldwide, but developed its system on a fairly frugal $27.5 million in funding.

The convenience of the arrangement – plus its attraction to carriers, who get to add another billable event to their operations at the cost of carrying the purchases for a while – has proven irresistible to eBay.

The acquisition also bolsters PayPal’s relationship with Facebook. The Social Network™ was already accepting payments through Zong, and last year began abandoned its rumoured “Facebook wallet” development work to sign on with PayPal for payments.

PayPal clearly sees mobile payments as something of a Holy Grail. When Google unveiled its mobile platform in May, PayPal responded with a lawsuit, saying that The Chocolate Factory had head-hunted developers from its own project to steal its secrets.®